Group Membership, Competition, and Altruistic versus Antisocial Punishment

49 Pages·2010·0.49 MB·English

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IZA DP No. 5189
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Group Membership, Competition, and
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E Altruistic versus Antisocial Punishment:
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Evidence from Randomly Assigned Army Groups
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N Lorenz Goette
O David Huffman
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S Stephan Meier
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Matthias Sutter
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I September 2010
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Forschungsinstitut
zur Zukunft der Arbeit
Institute for the Study
of Labor
Group Membership, Competition, and
Altruistic versus Antisocial Punishment:
Evidence from Randomly Assigned
Army Groups

Lorenz Goette
University of Lausanne and IZA

David Huffman
Swarthmore College and IZA

Stephan Meier
Columbia University and IZA

Matthias Sutter
University of Innsbruck,
University of Gothenburg and IZA

Discussion Paper No. 5189
September 2010

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IZA Discussion Paper No. 5189
September 2010

ABSTRACT

Group Membership, Competition, and Altruistic versus Antisocial
Punishment: Evidence from Randomly Assigned Army Groups*

We investigate how group boundaries, and the economic environment surrounding groups,
affect altruistic cooperation and punishment behavior. Our study uses experiments conducted
with 525 officers in the Swiss Army, and exploits random assignment to platoons. We find
that, without competition between groups, individuals are more prone to cooperate
altruistically in a prisoner’s dilemma game with in-group as opposed to out-group members.
They also use a costly punishment option to selectively harm those who defect, encouraging
a norm of cooperation towards the group. Adding competition between groups causes even
stronger in-group cooperation, but also a qualitative change in punishment: punishment
becomes antisocial, harming cooperative and defecting out-group members alike. These
findings support recent evolutionary models and have important organizational implications.

JEL Classification: C72, C91, C93

Keywords: group membership, competition, punishment, army, experiment

Corresponding author:

Matthias Sutter
Department of Public Finance
University of Innsbruck
Universitaetsstrasse 15
A-6020 Innsbruck
Austria
E-mail: [email protected]

* We thank seminar and conference participants at Harvard University, George Mason University, UC
Berkeley, UC Santa Barbara, University of Pittsburgh, Temple University, Tel Aviv University, Wharton
School, Tilburg University, ESA Tucson for very helpful comments.
1 Introduction
Many beneficial exchanges require humans to cooperate and trust each other, even though
narrow self-interest may tempt them to act selfishly. Evidence suggests, however, that
while altruistic cooperation is measurable it is often not strong enough on its own to
sustain high levels of cooperation (e.g., Fehr and Schmidt, 1999). Rather, cooperation is
often sustained by a willingness of subjects to expend resources to impose harm on others
who act selfishly; this altruistic, and costly, informal sanctioning can deter defection
(Gu¨th et al., 1982; Roth, 1995; Fehr and Gachter, 2000; Falk et al., 2005). The pervasive
tendency for formal contracts to be incomplete (Williamson et al., 1975; Ostrom, 1990;
Hechter and Opp, 2001; Knez and Simester, 2001; MacLeod, 2007) underlines the many
potential opportunities for informal sanctions to improve efficiency within societies and
organizations.
However, the idea that punishment helps enforce a norm of cooperation that leads to ef-
ficiency gains, and is therefore a pro-social motivation, is hotly contended (Dreber et al.,
2008; Egas and Riedl, 2008; Herrmann et al., 2008; Houser et al., 2008; Abbink et al.,
2010). Herrmann et al. (2008) show that in many societies punishment does not punish
solely defections from the supposed norm of cooperation, but rather takes the form of
antisocial punishment. The latter form of punishment denotes the sanctioning of people
who behave cooperatively. Such antisocial punishment does not enhance efficiency, but
instead wastes resources of both the punisher and the punished. Rather than sustain-
ing cooperation, antisocial punishment impedes cooperation. The fundamental question
addressed in this paper is under which conditions the beneficial or harmful form of pun-
ishment manifests? In other words, we examine the determinants of prosocial, altruistic
punishment versus antisocial punishment.1
1We follow the terminology in the literature, and refer to costly punishment of defectors as “altruistic
punishment” (Fehr and Gachter, 2000; Herrmann et al., 2008).
2
The central premise of this paper is that the interaction of social group membership, with
the economic conditions of inter-group relationships (mutual independence or competi-
tion), is the key to understanding in which situations punishment may be a prosocial
act to foster cooperation and when it might turn into efficiency-reducing antisocial pun-
ishment. We run experiments with 525 officers in the Swiss Army. For the duration
of its officer training program, the Army randomly forms platoons of the officer candi-
dates, thus providing us with a strong, yet exogenous manipulation of group membership.
We can show that when there is no competition between groups, individuals cooperate
more in a prisoner’s dilemma game with in-group members than with out-group members.
They also use a punishment option to enforce cooperation norms, especially towards their
group. Importantly, we do not find that individuals punish others more simply because
they are members of another group. Hence, group boundaries per se create a punishment
mechanism that favors a norm of cooperation within one’s group.
In a second treatment, we add competition between groups to the experiment. In this
treatment, the tendency to cooperate with in-group members is even more pronounced.
As we explain in section 2, we add the competition between groups such that it leaves
the monetary payoffs from punishment unchanged. Thus, any change in punishment be-
havior must be due solely to the creation of a more competitive atmosphere, not because
of a change in which punishment can affect outcomes. We find a qualitative, and dra-
matic change in punishment patterns: We find strong out-group hostility, in the sense
that out-group members are punished harder, and punishment is applied to cooperative
and defecting out-group members alike. Thus, punishment here takes on the qualitative
pattern of antisocial punishment directed towards the out-group. Thus, our results show
that competition triggers a non-strategic desire to harm the out-group, even though this
is personally costly. These findings are in line with recent evolutionary models, in which
altruism survives partly because, in times of scarcity, it can make people willing to engage
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in personally costly attacks on competing groups (Choi and Bowles, 2007; Bowles, 2009).
Recently, socialgroupmembershipeffectshavereceivedalotofattentionintheeconomics
literature. One the one hand, it has been argued that individuals have social preferences
that favor the in-group. So, membership in various groups may affect the willingness
of members of an organization to engage in prosocial behavior like altruistic coopera-
tion, or norm enforcement, which enhances efficiency but involves no personal material
reward (see, e.g., Akerlof and Kranton, 2000, 2005). On the other hand, it has been
conjectured that group membership could have a dark side as well (e.g., Durlauf, 1999)
by leading to strong out-group hostility (for a survey, see Hewstone et al., 2002).2 Sadly,
it is obvious that many political conflicts and wars are along (ethnic) group lines (see,
e.g., Blattman and Miguel, 2010) and it is a strong empirical regularity that ethnic diver-
sity, i.e. intense interaction of different groups, decreases cooperation (e.g., Alesina et al.,
1999; Habyarimana et al., 2007). Interestingly, though, one can think of many examples
where group boundaries do not necessarily lead to conflict. Therefore, there has to be an
additional factor on top of group membership per se that triggers out-group hostility.
Of course, it has already been shown experimentally that competition between groups
has behavioral implications for in-group and between-group interactions, leading to more
cooperationwithingroups(BornsteinandBen-Yossef,1994;Bornsteinetal.,2002;Augen-
blick and Cunha, 2009). Similar to earlier studies, we also find that competition increases
cooperation within groups, without generating a taste for harming the out-group (Halevy
et al., 2008). Our results are similar, in that we find hostility is not expressed through
cooperation decisions.
We differ from the earlier literature by examining how group boundaries and competition
2Note that, conceptually, in-group favoritism need not be the flip-side of out-group hostility. Individ-
uals might favor the in-group, without going out of their way to harm the out-group (see, e.g., Bahry
et al. (2005) for evidence of inter-ethnic trust in Russia).
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affect the motives behind punishment, moving it closer to the experimental study of con-
flicts. Research studies using field data have often conjectured that competition explains
when groups are in conflict and when they are not. For example, the extent of competi-
tion for political power has been argued to explain why the Chewas and the Tubukas are
enemies in Malawi, but are friends right across the border in Zambia (Posner, 2004), and
conflict between natives and immigrants has been linked to the extent of competition in
the job market (Esses et al., 1998). The main challenge for this type of study, however, is
the presence of many factors that confound a clean identification of group effects per se,
andoftheeffectoftheeconomicenvironment. Forexample, groupstypicallydifferaccord-
ing to many characteristics, and these differences could drive behavior rather than group
membership. The extent of competition is also often not randomly assigned, raising the
concern that more hostile types self-select into competitive situations. Also, behavioral
measures have typically not allowed disentangling strategic motives from non-strategic
motives that lead to conflict between groups.3
Our approach of using Army officers is useful because it keeps many aspects from the
field while still leveraging the advantages of experimental methods. We build, in general,
on Goette et al. (2006), where we investigated in-group and out-group effects, but did
not examine how cooperation and punishment behavior interact with absence or presence
of competition. The use of randomly assigned real groups, i.e., platoons, has significant
advantages over most previous approaches. Studies based on real groups or existing
friends (e.g., Fershtman and Gneezy, 2001; Bahry et al., 2005; Bernhard et al., 2006;
Leideretal.,2009)analyzegroupswithsocialcontentandsocialtieswhichisanimportant
aspect of real groups. However, these groups are endogenously formed or differ in other
3Theseminalstudyinpsychologyinvolvedyoungboysbeingrandomlyassignedtodifferentgroupsata
summercamp,andbeingobservedastheyfirstplayedcompetitivegames,andthenengagedincooperative
activities(Sherifetal.,1961). Ourstudyisdifferentbecauseweuseadults,andmoreimportantlybecause
we have controlled choice experiments where anonymity allows disentangling strategic and non-strategic
motives.
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dimensions than just their group membership (i.e. ethnicity), making inferences about
the effects of groups per se difficult. A solution to these confounds is to randomly assign
individualstoso-called“minimal”groupswhicharenothingmorethanalabel(e.g.,Tajfel
et al., 1971; Charness et al., 2007; Chen and Li, 2009; Sutter, 2009). By design, these
groups lack any social content and behavior might be very different from real groups, as
shown in Goette et al. (2010). Combining the advantages of both group manipulation
methods, our groups do have social content as groups in the former method, but are at
the same time randomly assigned as groups in the minimal group-paradigm.
Our results fit well with previous evidence that antisocial punishment is especially pro-
nounced in societies with more ”close-knit” social networks, where people may perceive
everyone outside their network as a competitor (Herrmann et al., 2008). Importantly, in
contrast to earlier studies documenting the patterns of altruistic punishment (Fehr and
Gachter, 2000) or antisocial punishment (Herrmann et al., 2008; Abbink et al., 2010), we
have been able to trigger each by an experimental treatment, thus integrating the seem-
ingly contradictory, earlier findings on the altruistic or antisocial form of punishment in
a unified framework. The latter is a main contribution of this paper.
Our results also have important economic implications, in terms of understanding the
role of group boundaries, and inter-group competition, within organizations. While other
studies have examined the impact of social ties on behavior within organizations (e.g.,
Bandiera et al., 2010), our study uses assignment to groups as an exogenous manipulation
of social ties, and identifies a potential trade-off for firms of fostering competition between
social groups: A more competitive scheme may yield more cooperation within groups, but
more hostility between groups. Think of a company that lets two teams develop ideas for
an advertisement campaign for a new product. A competitive incentive scheme could give
alargebonustotheteamthatcomesupwiththemoreconvincingcampaign, perhapseven
firing the other one, while a non-competitive scheme might simply pay the baseline salary
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whichever team produces the more promising campaign. The competitive scheme might
increase efforts and cohesion within teams while limiting the opportunity to exchange
ideas across teams, although such an exchange could lead to an even better campaign.
Even more so, it might lead to destructive acts of withholding important information
for the rival team, although providing it would benefit the company as a whole. Our
results show that such a tradeoff can be tipped in favor of one or the other direction by
changing the economic environment in which teams act. Thus, there is a delicate balance
of cooperation and punishment within and between groups.
The outline of the paper is as follows. In section 2 we introduce the experimental design.
Section 3 presents behavioral hypotheses, and section 4 reports the experimental results.
Section 5 concludes the paper.
2 Experimental Design
We design experiments in the Swiss Army, which allows us to exploit the random assign-
mentofindividualsintoplatoonsasourgroupmanipulation. Wethenusetwoexperiments
and two treatments in each experiment to investigate the effect of competition between
groups on cooperation and particularly on norm enforcement.
2.1 Subject Pool and Random Group Assignment
All Swiss males are required to perform at least 300 days of military service, beginning
with twenty-one weeks of basic training. In week seven, about one fourth are selected
to go through ten weeks of officer-candidate training. Of these, one fourth are promoted
to officers and continue on to the Joint Officer Training Program (JOTP).4 Whereas
4The Swiss Army is organized as a reserve system and also officers - after the training - serve only a
couple of days per year in the Army.
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officer-candidate training is specific for each branch of service, and occurs in separate
locations, JOTP brings new officers from all branches of service together, to the same
location, for four weeks. Officers are randomly assigned to a platoon at the beginning of
JOTP, and spend virtually all time during the day with their platoon. Training involves
mainly coursework on principles of security, combat in large military units, logistics, and
leadership. At the end of JOTP, the platoons are dissolved and officers are once again
sent to separate locations, for further, advanced training specific to each branch of service.
We use the random assignment of candidates to platoons in JOTP as our manipulation of
social groups. Each platoon is identified by a different number. Assignment to platoons
is random, and stratified according to the different branches of service. The Army assigns
platoons orthogonally to any previous social ties among officers with the aim of promoting
exchanges of perspectives among different individuals and branches of service.
The assignment mechanism is ideal, in several ways, for investigating the impact of group
membership on behavior. First, trainees know that platoon composition is designed to
be identical and that nobody could choose which platoon to join. Indeed, statistical tests
reveal no significant differences in platoon composition, by branch of service, education,
or age. Second, there is no competition between the groups (or trainees) for evaluations or
otherresources. Relativeperformanceevaluationswerecompletedpreviously,incandidate
training. Thus, thereisno function ofthegroupassignment, otherthan toaffectthecircle
of individuals with whom an officer interacts most frequently. Third, social interactions
within a platoon are intense. Platoon members spend the whole workday with their
group, for the three weeks leading up to our experiments. Despite the fact that platoons
are assigned orthogonally to previous social ties, social interactions and ties also arise
endogenously within platoons in after-work time: In a questionnaire, officers in our study
report to a question on “How often do you spend off-duty time with members of a) your
own platoon or b) the other platoons?” that they spend significantly more time off-duty
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